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Perrigo (PRGO) Q2 Earnings Lag, Sales Hurt by Weak Cold Season
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Perrigo Company plc (PRGO - Free Report) reported second-quarter 2021 adjusted earnings of 50 cents per share, which missed the Zacks Consensus Estimate of 61 cents. Earnings decreased 15.3% year over year.
Net sales increased 3.4% year over year to $981 million but missed the Zacks Consensus Estimate of $1.02 billion. The year-over-year increase was driven by growth across all business and favorable currency movements, partially offset by weak cough/cold season amid the pandemic hurting OTC products. Organic net sales were up 0.5% year over year.
The company stated that consumer take away rebounded sharply during the second quarter across all businesses, including cough/cold, which is expected to result in better volumes and accelerated growth during the second half of 2021. It stated that volatility due to the pandemic is over unless any surge in infection leads to shutting down of markets again.
Shares of Perrigo were down 12.3% in pre-market trading on Aug 11, following lower-than-expected quarterly results. However, the company’s shares have gained 10% so far this year compared with the industry’s increase of 1.5%.
Image Source: Zacks Investment Research
Segment Discussion
Perrigo reports its results under the following segments — Consumer Self Care Americas (“CSCA”) and Consumer Self Care International (“CSCI”). Please note that the company completed divestment of its generic Rx Pharmaceuticals business to Altaris Capital Partners in July 2021. The reported financial results from the generic Rx pharmaceuticals business as discontinued operations.
CSCA: Net sales of the segment in the second quarter of 2021 came in at $622 million, down 0.9% year-over-year. Sales decreased due to historically weak cough/cold season and lower year over year retail inventories partially offset by growth in OTC market and Skin & Personal Hygiene category, and new product sales.
Net sales at CSCA decreased 1.4%, organically.
CSCI: The segment reported net sales of $359 million, up 11.7% from the year-ago period. Sales were driven by new or recently acquired product sales and favorable currency movements, partially offset by historically weak cough/cold season and lower sales in Skincare & Personal Hygiene category. Divested businesses hurt sales by $14 million. Organic sales increased 4.3%.
2021 Guidance Intact
Despite weak second quarter results, Perrigo maintained its previous guidance for 2021 on the back of anticipated strong recovery in consumer demand in the second half. The company expects to deliver organic net sales growth of 3% in 2021. It expects adjusted earnings to increase approximately 7% and be in the range of $2.50 to $2.70. However, it now expects its earnings to be toward the lower end of the range due to rising input costs.
Irish Revenue Notice Update
Along with the earnings release, the company announced that Irish Revenue allowed an aggregate reduction of more than €660.0 million to the income taxes claimed previously by the authority related to Elan Pharma that was acquired by Perrigo in 2013. However, the adjustments to the claimed amount are under the supervision of Appeal Commissioner. Perrigo stated that this is not a settlement of the tax appeal and believes the maximum amount of income tax claims now is less than €1.0 billion. The company will continue to pursue a final settlement in this tax appeal.
Perrigo Company plc Price, Consensus and EPS Surprise
Currently, Perrigo carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the pharma/biotech sector include Horizon Therapeutics , Vertex Pharmaceuticals (VRTX - Free Report) and Moderna (MRNA - Free Report) . While Horizon and Vertex sport a Zacks Rank #1 (Strong Buy), Moderna carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Horizon’s earnings per share estimates have moved north from $3.62 to $4.46 for 2021 and from $5.18 to $5.84 over the past 30 days. The company delivered an earnings surprise of 29.2%, on average, in the last four quarters.
Vertex’s earnings estimates have been revised upward from $11.22 to $12.28 for 2021 and from $17.83 to $22.26 over the past 30 days. The company delivered an earnings surprise of 7.09%, on average, in the last four quarters.
Moderna’s earnings per share estimates have increased from $24.71 to $29.04 for 2021 and from $5.02 to $7.55 over the past 30 days.
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Perrigo (PRGO) Q2 Earnings Lag, Sales Hurt by Weak Cold Season
Perrigo Company plc (PRGO - Free Report) reported second-quarter 2021 adjusted earnings of 50 cents per share, which missed the Zacks Consensus Estimate of 61 cents. Earnings decreased 15.3% year over year.
Net sales increased 3.4% year over year to $981 million but missed the Zacks Consensus Estimate of $1.02 billion. The year-over-year increase was driven by growth across all business and favorable currency movements, partially offset by weak cough/cold season amid the pandemic hurting OTC products. Organic net sales were up 0.5% year over year.
The company stated that consumer take away rebounded sharply during the second quarter across all businesses, including cough/cold, which is expected to result in better volumes and accelerated growth during the second half of 2021. It stated that volatility due to the pandemic is over unless any surge in infection leads to shutting down of markets again.
Shares of Perrigo were down 12.3% in pre-market trading on Aug 11, following lower-than-expected quarterly results. However, the company’s shares have gained 10% so far this year compared with the industry’s increase of 1.5%.
Image Source: Zacks Investment Research
Segment Discussion
Perrigo reports its results under the following segments — Consumer Self Care Americas (“CSCA”) and Consumer Self Care International (“CSCI”). Please note that the company completed divestment of its generic Rx Pharmaceuticals business to Altaris Capital Partners in July 2021. The reported financial results from the generic Rx pharmaceuticals business as discontinued operations.
CSCA: Net sales of the segment in the second quarter of 2021 came in at $622 million, down 0.9% year-over-year. Sales decreased due to historically weak cough/cold season and lower year over year retail inventories partially offset by growth in OTC market and Skin & Personal Hygiene category, and new product sales.
Net sales at CSCA decreased 1.4%, organically.
CSCI: The segment reported net sales of $359 million, up 11.7% from the year-ago period. Sales were driven by new or recently acquired product sales and favorable currency movements, partially offset by historically weak cough/cold season and lower sales in Skincare & Personal Hygiene category. Divested businesses hurt sales by $14 million. Organic sales increased 4.3%.
2021 Guidance Intact
Despite weak second quarter results, Perrigo maintained its previous guidance for 2021 on the back of anticipated strong recovery in consumer demand in the second half. The company expects to deliver organic net sales growth of 3% in 2021. It expects adjusted earnings to increase approximately 7% and be in the range of $2.50 to $2.70. However, it now expects its earnings to be toward the lower end of the range due to rising input costs.
Irish Revenue Notice Update
Along with the earnings release, the company announced that Irish Revenue allowed an aggregate reduction of more than €660.0 million to the income taxes claimed previously by the authority related to Elan Pharma that was acquired by Perrigo in 2013. However, the adjustments to the claimed amount are under the supervision of Appeal Commissioner. Perrigo stated that this is not a settlement of the tax appeal and believes the maximum amount of income tax claims now is less than €1.0 billion. The company will continue to pursue a final settlement in this tax appeal.
Perrigo Company plc Price, Consensus and EPS Surprise
Perrigo Company plc price-consensus-eps-surprise-chart | Perrigo Company plc Quote
Zacks Rank and Stocks to Consider
Currently, Perrigo carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the pharma/biotech sector include Horizon Therapeutics , Vertex Pharmaceuticals (VRTX - Free Report) and Moderna (MRNA - Free Report) . While Horizon and Vertex sport a Zacks Rank #1 (Strong Buy), Moderna carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Horizon’s earnings per share estimates have moved north from $3.62 to $4.46 for 2021 and from $5.18 to $5.84 over the past 30 days. The company delivered an earnings surprise of 29.2%, on average, in the last four quarters.
Vertex’s earnings estimates have been revised upward from $11.22 to $12.28 for 2021 and from $17.83 to $22.26 over the past 30 days. The company delivered an earnings surprise of 7.09%, on average, in the last four quarters.
Moderna’s earnings per share estimates have increased from $24.71 to $29.04 for 2021 and from $5.02 to $7.55 over the past 30 days.